But pawnbroker’s retail sales remained resilient in tough environment.
Pawnbroker H&T Group has released its preliminary results for the year ended December 31 2013, with group profit before tax falling 60.6% to £6.7 million but retail sales climbing 23.9% to £24.9 million.
According to the results, H&T’s group profit totalled £49.9 million in 2013, a reduction of 19.9% compared to 2012’s figure of £62.3 million. Its pledgebook value fell 14.5% from £51.6 million to £44.1 million.
At present, H&T operates a total of 194 retail locations in the UK, having closed seven last year, opened five and acquired three stores and four pawnbroking loan books. It is said to have served in excess of 180,000 customers in 2013 with more than £100m in pawnbroking loans.
H&T chief executive John Nichols said: “2013 was a challenging year for the pawnbroking industry, with the sector impacted by a sudden fall in the gold price in Q2 2013, heightened competitive activity and regulatory challenges across the wider UK alternative credit sector.
"Despite this challenging back-drop the group has performed resiliently. We have focused on reducing net debt and increasing retail sales to counter the reduction in revenues from scrap disposition. We have also carried out measured cost reductions which resulted in lower operating costs in 2013, despite the group’s larger footprint. This reduction is expected to continue into 2014 as we benefit from the full year effect of measures implemented in H2 2013."
H&T’s jewellery retail sales gained strength last year, enhanced by new point of sale, pricing policy and stock replenishment. In total, the group’s jewellery retail sales climbed 24% year-on-year to £24.9m, with the majority of this growth occurring in H2 2013.
H&T salso continued its capital investment into "bright and welcoming stores" and has pushed capital into jewellery stock levels to provide it with "a solid base from which to further grow retail sales". During Q4 2013 the cost of goods sold through the retail channel was up by 118% on prior year.
With a view to the company’s gold purchasing, profits declined from £12m in 2012 to £4.8m in 2013, a decrease that H&T says is down to several factors, including the lower gold price, the closure of its gold bar operations, volume declines and improved retail sales.
The group’s retail mall units – gold bars – contributed £0.7m to gold purchasing profits in 2013 as compared to £3.1m in 2012 as the group reduced this operation. At present the group has no retail mall units in operation. The weight of the gold purchased by H&T has also been in decline, with a slow down dating back two-and-a-half years.
Looking ahead to the end of 2014, H&T said it is seeking to retain its position as the UK’s leading pawnbroker through the provision of access to cash and other related services in a fair, safe and friendly environment that exceeds the expectations of our customers.
Nichols added: "The group aims to maintain its high levels of repeat custom with a continued focus on brand recognition, excellent customer service, investment in the existing store estate and maintaining its reputation for fairness and honesty.
"Current trading is in line with management’s expectations for 2014 and in particular the growth in retail seen in Q4 2013 has continued into early 2014."